A hedge fund made $700 million on its GameStop investment but bailed after Elon Musk's 'Gamestonk' tweet

The Bull of Wall Street — r/WallStreetBets weren't the only ones to make money off of GameStop.
Brendan McDermid/REUTERS

Senvest Management made $700 million on its Gamestop investment, The Wall Street Journal reported.
The hedge fund sold its 5% stake after Elon Musk tweeted about the Reddit-fueled rally.
Senvest's profit shows retail investors are far from the only winners of the market frenzy.
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The Reddit-fueled market mania that sent GameStop and other heavily-shorted stocks soaring last month has often been described as a perfect example of retail investors sticking it to the Wall Street establishment.

But not everyone on Wall Street was betting against GameStop.

New York-based hedge fund Senvest Management started investing in GameStop before it caught fire with much of the r/WallStreetBets crowd, and by October 2020, it owned more than 5% of the company, The Wall Street Journal reported Wednesday.

Senvest paid under $10 for most of its shares, and after GameStop stock peaked at more than $400, the hedge fund walked away with a $700 million profit, one of the biggest winners, according to The Journal.

By contrast, Reddit user r/DeepF---ingValue, who has largely been credited with igniting the GameStop rally, claims to have made a $48 million profit.

While Senvest got in on GameStop after a compelling presentation by its new CEO George Sherman and the involvement of investor and Chewy founder Ryan Cohen, it got out because of a tweet fired off by Elon Musk, The Journal reported.

On January 26, after the market closed, Musk simply tweeted "Gamestonk!!"

Musk's tweet helped extend the short-squeeze, sending GameStop's stock surging another 157% when the market reopened the following morning.

"Given what was going on, it was hard to imagine it getting crazier," Senvest CEO and fund manager Robert Mashaal told The Journal.

Many hedge funds have been hit hard by the recent market frenzy. But even GameStop short-seller Melvin Capital, one of the biggest losers with losses of 53% in January, eventually got a $2.8 billion bailout from other hedge funds.

Meanwhile, GameStop's stock had already dipped back down to around $92 on Wednesday, and reports are emerging of retail investors who bought in late and have already lost massive sums.

Read the original article on Business Insider